Net income fell 13% as sales fell in the fourth quarter for Wisconsin Energy Corp., the parent company of We Energies, but the utility company still delivered record full-year profit and results that topped analysts’ forecasts.

Net income in the fourth quarter was $98.8 million, or 43 cents a share, down from $114.1 million, or 49 cents, a year earlier. The results were 2 cents higher than analysts’ projections. Quarterly sales were down 3.7% to $1.07 billion from $1.11 billion.

Profit for the full year was up 6.5% to $546.3 million, or $2.35 a share, from $512.8 million, or $2.18, in 2011.

The company cited lower operation and maintenance costs and hot summer weather as factors driving the full-year results.

The results came while We Energies customers’ electricity rates were frozen for the year. The utility was granted a rate increase at the end of the year that took effect Jan. 1.

In 2013, the company is forecasting earnings per share of $2.38 to $2.48 per share, which would translate to earnings growth of 1.3% to 5.5% compared with 2012, chief financial officer Pat Keyes said during an investor conference call.

The projected earnings growth is coming despite essentially no growth in electricity sales in the company's forecast for this year, said Gale Klappa, chairman and chief executive.

Wisconsin Energy's shares closed at $39.15 on Wednesday, up 27 cents.

We Energies said electricity sales were mixed in 2012, with sales to residential customers up 0.5% but sales to small commercial and industrial customers up 0.7%.

Sales to large industrial and commercial customers were down 2.8%, but much of that decline was linked to an outage at an iron ore mine in Michigan’s Upper Peninsula. The mine returned to operation in September.

Excluding the mines, sales to large industrial and commercial customers fell 1.8%, results that were better than expected. The utility is expecting slight sales growth of 0.2% for non-mine big customers in 2013.

“Overall, sales to our large commercial and industrial customers came in better than forecast,” Klappa said in a statement. “Based on customer input, we had expected a decline in sales. As the year progressed, however, we saw strength in several sectors – including food products, chemical manufacturing, metal fabrication and plastics.”

During the investor conference call, Klappa said the company is planning capital spending of $3.2 billion to $3.5 billion over the next five years, reflecting its work to upgrade the distribution system for both the electric and natural gas utilities.

The spending plan also includes the $60 million to $65 million cost to convert the Valley power plant near downtown Milwaukee to burn natural gas instead of coal, as well $150 million to expand the utility’s natural gas infrastructure in west-central Wisconsin.

That part of the state is seeing higher demand for natural gas, for two reasons, Klappa said. Sand mining operations, which require natural gas in their process, are expanding in that part of the state as part of the boom in domestic natural gas production. In addition, Klappa said the utility sees demand in that part of the state from customers who are converting their heating systems from propane to natural gas.

Construction is continuing on the biomass power plant at Domtar Corp.'s paper mill in Rothschild, with the project scheduled for completion by the end of the year.

Tax credits from the federal government for the $255 million renewable energy project are already showing up on We Energies customers' bills as a credit. The issuance of credits before We Energies has received the federal grant will reduce quarterly earnings in the next three quarters by 3 cents a share each quarter, Keyes said.

The reduced earnings will be reversed with a 9-cent gain expected in the fourth quarter, once the grant is issued.

In addition to record earnings, Klappa said the utility had a strong year operationally, receiving record scores for employee safety, high customer satisfaction scores. In addition, We Energies was named the most reliable utility in the Midwest, an award it has won eight times in the past 11 years, he said.

About Thomas Content

Thomas Content covers energy, clean technology and sustainable business. A series he co-wrote on energy and climate change won top honors in 2008 from the National Press Foundation.

Energy Business News

EnSync Energy Systems has shipped a utility-scale energy storage system to South Korea, the Menomonee Falls company said.

The 500-kilowatt-hour system incorporates enough battery power for four or more hours of discharge, using EnSync’s zinc bromide flow batteries as well as power electronics and converters.

Formerly known as ZBB Energy, EnSync is focused on smaller energy storage systems for commercial buildings such as projects it's built in Hawaii in recent years. But it's also been working on larger energy storage systems.